Sign In
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
Kolkata: The Indian IT services industry that has seen unstable times in the past few years after the pandemic is headed for more stable times in the current fiscal, credit rating agency ICRA has said. It has said that the industry is set to grow at 2-3% on a year-on-year basis in the current financial year in dollar terms. In the last financial year (FY25), the industry grew by 2.9%.
This statement can also bring assurance to a number of investors since IT companies are among the benchmark baskets of the Indian equity market. For example, Tata Consultancy Services (TCS), Infosys, HCL Technologies, and Wipro are both in the Sensex 30 and Nifty 50 baskets and are among the bluechip and most liquid stocks.
However, the industry will be dogged by an element of uncertainty, thanks to Donald Trump's retaliatory tariffs which is still unfolding on the global markets. "Notwithstanding some recovery in operating income rise in recent quarters, the Indian IT services industry is unlikely to witness any material uptick in earnings momentum in FY2026 owing to the uncertainties arising due to US tariff imposition," ICRA said. The agency analysed the performance and statements of 15 top IT companies that constitute 60% of the IT industry's turnover in this country.
Millions of students look forward to the IT companies and the hiring demand they project. ICRA said that the hiring landscape could be subdued in the light of the low growth rate. IT companies will like to have an unambiguous signal in demand before they start hiring in large numbers. The agency also indicated that hiring prospects could be brighter for those who are skilled in AI and generative AI, since the IT sector is pursuing this growing sector as a focus area. Adoption of new technology is set to majorly influence hiring trends and patterns. According to reports, about 15 lakh engineering graduates walk out of Indian colleges every year and about 6-8 lakh of them are from computer science and IT. Most of them look forward to campus recruitments from the IT majors.
Traditionally, the revenue of Indian IT companies flow from clients based in the US and European firms and organisations. As much as 80-90% of the IT industry's cumulative revenue can be traced to these regions. Therefore, the fortunes of the IT companies in India is directly impacted by the rate of economic growth of the US and European regions. These regions had a moderate growth in the last financial year and growth rate projections remain clouded by the US President's retaliatory tariff and attendant trade uncertainties. If growth is sluggish, major companies in these regions will cut their IT budgets, which can affect growth rates of Indian IT companies.
According to ICRA, some benefits might flow from the India-UK Free Trade Agreement to the Indian IT services companies. The agency said that there has been a provision that exempts social security contributions for three years for UK-based temporary Indian employees and their employers. This, ICRA thinks can be an incentive to raise the number of IT workers going to the UK (and vice versa).
